Wisconsin Administrative Code
Office of the Commissioner of Insurance
Chapter Ins 50 - Annual Audited Financial Reports, Annual Financial Statements And Examinations
Subchapter V - Actuarial Opinion and Memorandum Regulation
Section Ins 50.78 - Statement of actuarial opinion based on an asset adequacy analysis
Universal Citation: WI Admin Code ยง Ins 50.78
Current through August 26, 2024
(1) GENERAL DESCRIPTION. The statement of actuarial opinion submitted in accordance with this subchapter shall consist of:
(a) A
paragraph identifying the appointed actuary and his or her
qualifications;
(b) A scope
paragraph identifying the subjects on which an opinion is to be expressed and
describing the scope of the appointed actuary's work, including a tabulation
delineating the reserves and related actuarial items which have been analyzed
for asset adequacy and the method of analysis, and identifying the reserves and
related actuarial items covered by the opinion which have not been so
analyzed;
(c) A reliance paragraph
describing those areas, if any, where the appointed actuary has deferred to
other experts in developing data, procedures or assumptions, including
anticipated cash flows from currently owned assets and variation in cash flows
according to economic scenarios, supported by a statement of each such expert
in the form prescribed by sub. (5); and
(d) An opinion paragraph expressing the
appointed actuary's opinion with respect to the adequacy of the supporting
assets to mature the liabilities.
(e) One or more additional paragraphs will be
needed in individual company cases as follows:
1. If the appointed actuary considers it
necessary to state a qualification of his or her opinion;
2. If the appointed actuary must disclose an
inconsistency in the method of analysis or basis of asset allocation used at
the prior opinion date with that used for this opinion.
3. If the appointed actuary must disclose
whether additional reserves of the prior opinion date are released as of this
opinion date, and the extent of the release.
4. If the appointed actuary chooses to add a
paragraph briefly describing the assumptions which form the basis for the
actuarial opinion.
(2) RECOMMENDED LANGUAGE. The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. The language provided in this subsection is that which in typical circumstances should be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary shall use language which clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this section.
(a) The opening paragraph should generally
indicate the appointed actuary's relationship to the company and his or her
qualifications to sign the opinion.
1. For a
company actuary, the opening paragraph of the actuarial opinion should read as
follows: "I, [name], am [title] of [insurance company name] and a member of the
American Academy of Actuaries. I was appointed by, or by the authority of, the
Board of Directors of said insurer to render this opinion as stated in the
letter to the commissioner dated [insert date]. I meet the Academy
qualification standards for rendering the opinion and am familiar with the
valuation requirements applicable to life and health insurance
companies."
2. For a consulting
actuary, the opening paragraph should contain a sentence such as: "I, [name], a
member of the American Academy of Actuaries, am associated with the firm of
[name of consulting firm]. I have been appointed by, or by the authority of,
the Board of Directors of [name of company] to render this opinion as stated in
the letter to the commissioner dated [insert date]. I meet the Academy
qualification standards for rendering the opinion and am familiar with the
valuation requirements applicable to life and health insurance
companies."
(b) The
scope paragraph shall include a statement, and table, such as the following: "I
have examined the actuarial assumptions and actuarial methods used in
determining reserves and related actuarial items listed below, as shown in the
annual statement of the company, as prepared for filing with state regulatory
officials, as of December 31, [year]. Tabulated below are those reserves and
related actuarial items which have been subjected to asset adequacy analysis. -
-
(bg) The tabulation in the scope
paragraph required under par. (b) shall conform to the following:
1. The additional actuarial reserves are the
reserves established under s.
Ins 50.75(5)
(b).
2. The appointed actuary should indicate the
method of analysis, determined in accordance with the standards for asset
adequacy analysis referred to in s.
Ins 50.75(4), by means of symbols which
should be defined in footnotes to the table.
3. The AVR shall be the allocated amount of
asset valuation reserve.
(c) If the appointed actuary has relied on
other experts to develop certain portions of the analysis, the reliance
paragraph should include a statement such as the following: "I have relied on
[name], [title] for [insert description of a portion relied upon such as
anticipated cash flows from currently owned assets, including variations in
cash flows according to economic scenarios] and, as certified in the attached
statement. I have reviewed the information relied on for
reasonableness."
(cg) A statement
of reliance on other experts shall be accompanied by a statement by each of
such experts in the form prescribed by sub. (5).
(d) If the appointed actuary has examined the
underlying asset and liability records, the reliance paragraph shall also
include the following: "My examination included such review of the actuarial
assumptions and actuarial methods and of the underlying basic asset and
liability records and such tests of the actuarial calculations as I considered
necessary. I also reconciled the underlying basic asset and liability records
to [exhibits and schedules listed as applicable] of the company's current
annual statement."
(e) If the
appointed actuary has not examined the underlying records, but has relied upon
data, such as listings and summaries of policies in force or asset records,
prepared by the company, the reliance paragraph shall include a statement such
as: "In forming my opinion on [specify types of reserves] I relied upon data
prepared by [name and title of company officer certifying in force records or
other data] as certified in the attached statements. I evaluated that data for
reasonableness and consistency. I also reconciled that data to [exhibits and
schedules to be listed as applicable] of the company's current
annual statement. In other respects, my examination included review of the
actuarial assumptions and actuarial methods used and tests of the calculations
I considered necessary."
(eg) A
section described in par. (e) shall be accompanied by a statement by each
person relied upon in the form prescribed by sub. (5).
(f) The opinion paragraph should include all
of the following:
1. "In my opinion the
reserves and related actuarial values concerning the statement items identified
above:
a. Are computed in accordance with
presently accepted actuarial standards consistently applied and are fairly
stated, in accordance with sound actuarial principles;
b. Are based on actuarial assumptions which
produce reserves at least as great as those called for in any contract
provision as to reserve basis and method, and are in accordance with all other
contract provisions;
c. Meet the
requirements of the insurance law and rules of the state of [state of domicile]
and are at least as great as the minimum aggregate amounts required by the
state in which this statement is filed, unless alternative language is approved
under sub. (6).
d. Are computed on
the basis of assumptions consistent with those used in computing the
corresponding items in the annual statement of the preceding year-end (with any
exceptions noted below);
e. Include
provision for all actuarial reserves and related statement items which ought to
be established.
f. The reserves and
related items, when considered in light of the assets held by the company with
respect to the reserves and related actuarial items including, but not limited
to, the investment earnings on the assets, and the considerations anticipated
to be received and retained under the policies and contracts, make adequate
provision, according to presently accepted actuarial standards of practice, for
the anticipated cash flows required by the contractual obligations and related
expenses of the company.
g. The
actuarial methods, considerations and analyses used in forming my opinion
conform to the appropriate Standards of Practice as promulgated by the
actuarial standards board, which standards form the basis of this statement of
opinion."
1m. The
commissioner may approve omission of the language in subd. 1. f. for an opinion
filed on behalf of a company doing business only in this state and in no other
state.
2. The appropriate one of
the following 2 paragraphs:
a. This opinion is
updated annually as required by statute. To the best of my knowledge, there
have been no material changes from the applicable date of the annual statement
to the date of the rendering of this opinion which should be considered in
reviewing this opinion." or
b. "The
following material change(s) which occurred between the date of the statement
for which this opinion is applicable and the date of this opinion should be
considered in reviewing this opinion: (Describe the change or
changes.)"
3. "The
impact of unanticipated events subsequent to the date of this opinion is beyond
the scope of this opinion. The analysis of asset adequacy portion of this
opinion should be viewed recognizing that the company's future experience may
not follow all the assumptions used in the analysis.
Signature of Appointed Actuary
Address of Appointed Actuary
Telephone Number of Appointed Actuary
Date
(3) ASSUMPTIONS FOR NEW ISSUES. The adoption for new issues or new claims or other new liabilities of an actuarial assumption which differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this section.
(4) ADVERSE OPINIONS. If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph.
(5) RELIANCE ON INFORMATION FURNISHED BY OTHER PERSONS. If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion shall indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance. In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness or reasonableness, as applicable, of the items. This certification shall include the signature, title, company, address and telephone number of the person rendering the certification, as well as the date on which it is signed.
(6) ALTERNATE OPTION.
(a) The commissioner has authority under ch.
623, Stats., to accept the valuation of a foreign insurer when that valuation
meets the requirements applicable to a company domiciled in this state in the
aggregate. As an alternative to the requirements sub. (2) (f) 1. c., the
commissioner may, by written approval issued to a specific insurer, allow the
opining actuary to use one or more of the following additional approaches:
1. A statement that the reserves "meet the
requirements of the insurance laws and regulations of the State of [state of
domicile] and the formal written standards and conditions of this state for
filing an opinion based on the law of the state of domicile." If the
commissioner chooses to allow this alternative, the commissioner's approval
shall provide instructions with a list of standards and conditions. If a
company chooses to use this alternative, the commissioner's approval, including
standards and conditions for that approval in effect on July 1 of a calendar
year, shall apply to statements for that calendar year, and they shall remain
in effect until they are revised or revoked. The commissioner will not grant
approval under this subdivision unless instructions are included with standards
and conditions.
2. A statement that
the reserves "meet the requirements of the insurance laws and regulations of
the State of [state of domicile] and I have verified that the
company's request to file an opinion based on the law of the state
of domicile has been approved and that any conditions required by the
commissioner for approval of that request have been met." This alternative may
be used only if the commissioner issues a formal written statement of such
allowance no later than March 31 of the year it is first effective. It shall
remain valid until rescinded or modified by the commissioner. The rescission or
modifications shall be issued no later than March 31 of the year they are first
effective. Subsequent to that statement being issued, if a company chooses to
use this alternative, the company shall file a request to do so, along with
justification for its use, no later than April 30 of the year of the opinion to
be filed. The request is deemed approved on October 1 of that year if the
commissioner has not denied the request by that date.
3. A statement that the reserves "meet the
requirements of the insurance laws and regulations of the State of [state of
domicile] and I have submitted the required comparison as specified by this
state." This alternative statement may be used only if the commissioner gives
written approval to the specific insurer, with instructions for a written list
of products, to be added to the table in subd. 3. a., for which the required
comparison shall be provided. If a company chooses to use this alternative, the
approved instructions in effect on July 1 of a calendar year shall apply to
statements for that calendar year, and the approval and instructions shall
remain in effect until they are revised or revoked. This alternative is not
available unless the commissioner approves and includes instructions. If a
company uses this alternative, the appointed actuary shall provide a comparison
of the gross nationwide reserves held to the gross nationwide reserves that
would be held under NAIC codification standards. The comparison provided by the
company is to be kept confidential to the same extent and under the same
conditions as the actuarial memorandum. Gross nationwide reserves are the total
reserves calculated for the total company in force business directly sold and
assumed, indifferent to the state in which the risk resides, without reduction
for reinsurance ceded. The information provided shall comply with the
commissioner's instructions and shall include at least all the following:
a. A table as follows: -
|
(1) Product Type |
(2) Death Benefit or Account Value |
(3) Reserves Held |
(4) Codification Reserves |
(5) Codification Standard |
b.
The information listed shall include all products identified by either the
state of filing or any other states subscribing to this alternative.
c. If there is no codification standard for
the type of product or risk in force or if the codification standard does not
directly address the type of product or risk in force, the appointed actuary
shall provide detailed disclosure of the specific method and assumptions used
in determining the reserves held.
(b) The comparison provided by the company
under par. (a) shall be kept confidential to the same extent and under the same
conditions as the actuarial memorandum.
(c) Notwithstanding par. (a), the
commissioner may reject an opinion based on the laws and regulations of the
state of domicile and require an opinion based on the laws of this state. The
commissioner may contract an independent actuary at the company's expense to
prepare and file the opinion unless a company provides the required opinion
within sixty days of the date the commissioner demands that the company provide
such an opinion or such other period of time determined by the commissioner
after consultation with the company. The paragraph does not limit or restrict
the penalties or other consequence that otherwise apply for failure to timely
file the required opinion.
Disclaimer: These regulations may not be the most recent version. Wisconsin may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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